CPPGroup Plc Replacement Half Yearly Report -5-

In Germany new and renewal income has grown well, which combined with an increasing customer base, high renewal rates and lower direct costs has led to a reduced operating loss. Campaigns with our Business Partners, DZ Bank AG and WGZ Bank in particular, have produced encouraging results. We are pleased to have signed a new Business Partner in the period, Card Complete, Austria's largest credit card issuer, as a pilot venture in the Austrian market managed through our German operation and we have also launched a new campaign with Ikano Bank. The current focus remains on scaling our operations and to launch Business Partner sales channels alongside further market opportunities supported by stable macro economic conditions that will enable us to continue to deliver solid results and move to break-even.

We have performed in line with expectations in Ireland, which continues to be a difficult economy for our business. Revenue has decreased modestly in the period, although we continue to work closely with Meteor in the mobile arena.

In Turkey, despite a decline in revenue and profit, our operating profit margin has improved as a result of the change in revenue mix, with renewals forming a higher proportion of revenue. Our performance in Turkey is in line with expectations and reflects the impact of Akbank not renewing their contract in August 2011. This is mitigated by the growth of the renewal book. Expanding our Business Partner network is the main focus for the business and in the period we signed new agreements with ING Bank, Sekerbank, Turkiye Finansbank and CIV.

Southern Europe and Latin America

-- Revenue* 6% lower at GBP20.0 million (H1 2011: GBP22.8 million)

-- Operating profit* 17% lower at GBP4.6 million (H1 2011: GBP5.9 million),

-- Latin America: strong growth in Mexico and market entry activities continuing in Brazil

-- Southern Europe improved renewal rates despite on-going adverse Eurozone macro conditions

-- New Business Partner contracts signed

* excluding the impact of foreign exchange

Southern Europe and Latin America, which represents 12% of Group half year revenue, has seen mixed results with revenue decreasing 6%, excluding the impact of foreign exchange. Operating profit in the region is 17% lower than in the first half of 2011, impacted by the continued difficult economic situation and banking sector conditions in the Eurozone region, which has affected both Business Partner and consumer confidence, disposable income levels, and consequently our trading performance. Nevertheless, we are encouraged by the growth in Latin America, with Mexico revenue growing well, albeit from a low base, and market entry activities continuing in Brazil.

In Southern Europe, comprising our businesses in Spain, Italy, Portugal and France, we have experienced an overall decline in revenue and operating profit as a result of lower new volumes and lower renewal income. Despite a reduced financial performance, particularly in Spain where adverse economic conditions continue, renewal rates have improved, which reinforces the value our customers place on our products. We have entered into a new Business Partner relationship with 20:20 which is a major distributor of Yoigo (4th largest telecom operator in Spain).

In Latin America, we have been encouraged by good revenue growth and reduced start up costs as we move towards break-even in Mexico. We continue to augment our performance, signing our first wholesale deal with Banco Inbursa. This provides us with a solid platform to achieve further sustainable growth in the second half of the year. Our newer market of Brazil has made progress with product propositions being discussed with a number of potential Business Partners.

North America

-- Revenue* up 21% at GBP26.0 million (H1 2011: GBP21.1 million)

-- Operating profit* up 75% at GBP5.2 million (H1 2011: GBP2.9 million)

-- Revenue growth led by new and renewal performance

-- Operating profit growth positively impacted by reduced customer acquisitions

* excluding the impact of foreign exchange

North America, which represents 16% of Group half year revenue, has grown revenue strongly, up 21% and increased operating profit by 75% as a result of new monthly bill volumes and increasing renewal streams primarily through our existing Business Partner relationships with Alliance Data, Sovereign Bank and Wells Fargo Wachovia. The operating profit increase is greater than the rate of revenue growth as a result of lower acquisition costs due to product mix and reducing new customer acquisitions in the first half of 2012. The lower rate of customer acquisition was due to reduced sales of our Purchaseshield product to Wells Fargo customers whilst they evaluate their product strategy and will result in lower growth rates for the rest of 2012.

Retail policy holders are in line with the prior year, while our wholesale policy holders have grown strongly, primarily due to the Packaged Account programme at Citizens Bank Financial Group Inc. In addition, the Packaged Account contract with this Business Partner has been extended for a period of two years.

Product innovation continues to drive our growth strategy and we are currently focused on additional new concepts and channels to market.

Asia Pacific

-- Revenue* up 11% at GBP3.3 million (H1 2011: GBP3.1 million)

-- Operating loss* 34% lower at GBP0.8 million (H1 2011: GBP1.2 million)

-- Operations maturing and country performance improving

* excluding the impact of foreign exchange

Our Asia Pacific business, which represents 2% of Group half year revenue, has performed well, with an 11% increase in revenue largely as a result of renewal revenue in India and China. Start up investment costs have reduced as operations begin to mature and country performance improves. We are encouraged by the sales pipeline with existing Business Partners and new prospects.

In China, we have grown revenue from a low base, although start up losses have increased as a result of higher overheads which were expected as we continue to develop the business. Despite the loss of our wholesale contract with China Guangfa Bank in July 2012 we will seek to take advantage of new opportunities in this market.

In India, we have grown revenue and significantly reduced our operating loss through the change in revenue mix and price increases. Opportunities arising from our sales pipeline, including a new Business Partner, Bajaj Finance Limited, coupled with our focus on developing and launching new product propositions are expected to drive future performance.

In Hong Kong, as expected, local challenges concerning data protection and privacy have resulted in lower revenue. Operating loss in this market is 34% lower at GBP0.8 million. The new Data Privacy Bill was passed on 27 June 2012 which provides clarity and allows us to move forward, adopting a new operating model to re-commence sales in this market.

In Malaysia, our revenue has been impacted by the introduction of Bank Negara Malaysia regulations in January 2012 and operating profit performance is lower due to increased overhead costs associated with the investment in strengthening our Business Development team. To mitigate this impact we are developing new products that take advantage of debit and credit card opportunities which meet specific consumer needs.

In Singapore, revenue has declined although we have generated a small local profit for the period. New regulations on credit card activation, effective in early July 2012, provide us with future card activation opportunities as we focus on channel diversification.

NEW MARKETS

Underlying operating profit includes GBP1.6 million (H1 2011: GBP2.6 million) of start up losses as we continue to invest in new markets. For these purposes we consider the following new markets to be developing: Hong Kong, Home 3, India, Mexico, China and Brazil.

We continue to make progress with Home 3, our joint venture with Mapfre Asistencia. Home 3 has continued to develop its relationship with existing Business Partners. The Group's investment in Home 3 for the half year, representing the Group's share of its losses after tax, amounts to GBP0.2 million (H1 2011: GBP0.7 million).

TAXATION

Our effective tax rate has increased to 34.6% (H1 2011: 31.0%), reflecting the lower proportion of Group profit generated and taxed in the UK, increased profit in North America and the incidence of losses in overseas start up markets for which no tax deduction is available.

FINANCING AND CASH FLOWS

Net finance costs for the half year have increased by GBP0.2 million to GBP0.6 million, reflecting the higher average loan balances held during the period compared to 2011.

The Group has in place an GBP80 million guaranteed Revolving Credit Facility (RCF) supported by a club of three banks which expires on 31 March 2013. The drawn balance on this facility at 30 June 2012 is GBP43.5 million, which is disclosed as a current liability given the expiry date of the facility. We continue to work towards renewing appropriate lending facilities in advance of the March 2013 maturity, as well as considering a number of alternative financing and strategic options.

The Group had net funds of GBP8.0 million at 30 June 2012, down from GBP11.9 million at 31 December 2011, as a result of voluntary redundancy payments in the UK and adverse working capital movements. The Group's insurance businesses maintain cash deposits for solvency purposes which were GBP22.8 million (H1 2011: GBP14.5 million) at 30 June 2012. Working capital requirement has increased by GBP10.2 million (H1 2011: GBP15.0 million) during the period, reflecting growth and timing of receipts from Business Partners associated with our increasing UK Packaged and wholesale business and the impact of a larger Mobile Phone Insurance book. Operating cash inflow for the period of GBP0.5 million has been offset by continued investment in our IT capabilities and Business Partner intangibles.